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Market Snapshot: U.S. stocks rise after further drop in jobless claims

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U.S. stocks traded mostly higher Thursday as investors sifted through data showing another fall in weekly applications for jobless benefits as well as an updated look at first-quarter gross domestic product.

What are major benchmarks doing?
  • The Dow Jones Industrial Average
    DJIA,
    +0.39%

    rose 196.93 points, or 0.6%, to 34,519.98.
  • The S&P 500
    SPX,
    +0.28%

    was up 17.05 points, or 0.4%, at 4,213.04.
  • The Nasdaq Composite
    COMP,
    +0.21%

    added 32.07 points, or 0.2%, to trade at 13,770.07.

On Wednesday, stocks essentially fought to a draw in another low-volume session, with the Dow eking out a gain of 10.59 points, or less than 0.1%, while the S&P 500 rose 0.2%. The tech-heavy Nasdaq Composite outpaced its peers, finishing 0.6% higher.

What’s driving the market?

The U.S. Labor Department said new applications for regular unemployment benefits fell for the fourth week in a row as the economic recovery from the waning coronavirus pandemic induced companies to hire more workers. Initial jobless claims sank 38,000 to 406,000 in the week ended May 22.

In other economic data, the Commerce Department said U.S. gross domestic product grew at a 6.4% annualized pace in the first quarter, unrevised from its initial estimate. Separately, durable-goods orders fell 1.3% in April while so-called core orders rose 1%. April pending-home sales fell 4.4%.

Stocks remain stuck in a holding pattern, analysts said, with investors focused on the Federal Reserve’s slowly shifting rhetoric around when it will begin discussions on pulling back on bond purchases.

On Wednesday, Randal Quarles, the Fed’s vice chairman for supervision, said it would soon be time for Fed officials to begin debating slowing the central bank’s bond purchases, if the economy continues to improve at its current pace. Federal Reserve Vice Chair Richard Clarida also said on Tuesday that U.S. central bank officials may be able to begin discussing the appropriate timing of scaling back their bond-buying program at upcoming policy meetings,

Still, long-term Treasury yields remain well below their March peaks “and there’s no sense of panic at all in bond markets about a soon-to-have taper debate at the Fed,” said Raffi Boyadjian, senior investment analyst at XM, in a note.

Trading activity is likely to remain subdued heading into a three-day weekend. U.S. markets will be closed Monday for the Memorial Day holiday.

Meanwhile, “stubbornly low” Treasury yields reflect either “a belief that a policy mistake by the Fed will restrain economic growth or that structural factors will keep inflation under control, despite the unprecedented amount of monetary and fiscal stimulus that has been unleashed on the U.S. economy,” said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance.

Zaccarelli said stocks and yields are likely to move higher as the economy continues to grow and inflation rebounds from pandemic lows, but equities likely are due for some type of pullback, either a “garden variety” 5% retreat or a larger correction, perhaps in the low double-digits. Either way, he said he would be a buyer “as the underlying fundamentals of the economy and corporate profits remain very strong.”

Meanwhile, Sen. Shelley Moore Capito of West Virginia said she and a small group of other Republicans would propose infrastructure spending of $928 billion over eight years, as they unveiled their counteroffer amid ongoing negotiations with President Joe Biden’s administration.

Meme stocks GameStop Corp.
GME,
-1.80%

and AMC Entertainment Holdings Inc.
AMC,
+17.02%

continued to steal the spotlight, with shares soaring for a third day Wednesday as retail traders piled into what is now another squeeze on hedge funds and other institutional investors shorting the stock. GameStop shares were down 0.8%, while AMC jumped nearly 14%.

Which companies are in focus?
  • Shares of Nvidia Corp.
    NVDA,
    -0.17%

    were down 0.1% after the gaming specialist reported results late Wednesday that broke several quarterly sales records and forecast revenue growth as much as $1 billion above Wall Street estimates for the current quarter amid a global chip shortage.
  • Ford Motor Co.
    F,
    +7.66%

    shares jumped more than 5% after RBC Capital analyst Joseph Spak turned bullish, citing more confidence in the auto maker’s financial targets and on the belief that the F-150 Lightning electric truck is likely a “watershed” moment for the company and the industry
  • Snowflake Inc.
    SNOW,
    -0.51%

    shares fell 1.8% after the software company Wednesday afternoon revealed that losses that were growing at a rate similar to its booming sales totals.
  • Okta Inc.
    OKTA,
    -11.22%

    shares dropped 9.6% after the cloud-software company reported fiscal first-quarter results late Wednesday.
  • Shares of Workday Inc.
    WDAY,
    -2.21%

    were down 2.6% after the enterprise cloud-software company late Wednesday attributed its first-quarter results to an improving market as companies prepare their businesses for a “post-pandemic world.”
  • Dollar Tree Inc.
    DLTR,
    -7.43%

    shares fell 7.7% after the discount retailer on Thursday delivered full-year earnings guidance below expectations.
  • Dollar General Corp.
    DG,
    +2.16%

    shares rose 2.3% after the company reported a smaller-than-expected fall in sales and raised guidance.
  • Shares of Sanderson Farms Inc.
    SAFM,
    +1.26%

    rose 1.9% after the company on Thursday reported fiscal second-quarter profit and sales that topped expectations, with improved poultry prices more than offsetting “significantly higher” feed grain costs. 
  • Burlington Stores Inc.
    BURL,
    -0.60%

    shares were down 0.2% after the discount retailer on Thursday blew past earnings estimates for its fiscal first quarter.
  • Best Buy Co. Inc.
    BBY,
    +0.56%

    shares rose 2.3% after the electronics retailer delivered earnings and revenue that topped forecasts and said it sees second-quarter same-store sales up 17%.
  • Elf Beauty Inc.
    ELF,
    -1.97%

    late Wednesday reported results that blew past Wall Street expectations for its fiscal fourth quarter and said it expects an increase between 8% and 10% for its sales in fiscal 2022. Shares were down 1.6%.
  • Williams-Sonoma Inc.
    WSM,
    -2.28%

    said Wednesday that profit surged in the latest period while revenue rose 42%, reflecting a pandemic boost to home-product sales. Shares fell 1.3%.
  • Shares of Zuora Inc.
    ZUO,
    -0.53%

    fell 1.7% after the maker of software for subscription-based businesses delivered results late Wednesday that beat Wall Street expectations.
  • The Financial Times reported that electric-car maker Tesla Inc.
    TSLA,
    +0.52%

    was opening new fronts in the battle to secure chips amid an industrywide shortage that includes paying in advance for those supplies and even buying its own plant. Tesla shares rose 1.2%.
What are other markets doing?
  • The yield on the 10-year Treasury note
    TMUBMUSD10Y,
    1.616%

    rose 4.8 basis points to 1.622%. Yields and bond prices move in opposite directions.
  • The ICE U.S. Dollar Index
    DXY,
    -0.05%
    ,
    a measure of the currency against a basket of six major rivals, was down 0.1%.
  • Oil futures edged higher, with the U.S. benchmark
    CL00,
    +0.36%

    up 0.2% at $66.31 a barrel. Gold futures
    GC00,
    -0.39%

    were lower, falling 0.4% to $1,895.90 an ounce.
  • The Stoxx Europe 600 index
    SXXP,
    +0.40%

    rose 0.5%, while London’s FTSE 100
    UKX,
    -0.03%

    was flat.
  • The Shanghai Composite
    SHCOMP,
    +0.43%

    rose 0.4%, while the Hang Seng Index
    HSI,
    -0.18%

    in Hong Kong fell 0.2%. Japan’s Nikkei 225
    NIK,
    -0.33%

    fell 0.3%.

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